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Gas-well royalties get free tax ride in Orange
(by Sali McSherry - December 02, 2009)
Gas-well royalties get free tax ride in Orange
By SALI McSHERRY
Additional safety regulations for oil-and-gas-well permit holders in Orange are now in effect, but the village won't tax royalties that residents earn from the wells.
Following neighboring communities, Orange expects the permit holder to provide a written report within 48 hours to the fire chief of any incidents or emergencies relating to the drilling operation.
The permit holder is to provide an employee-contractor who will be responsible for the well. If a safety issue is detected, the permit holder or its employee is expected to respond within 30 minutes, according to the legislation. In the event of a safety issue, the fire department has the authority to shut down the well.
Consistent with the Ohio Revised Code, the fire chief is responsible for the primary coordination of on-scene activities in an emergency situation.
The permit holder is responsible to install "hold-open" latches on all wellhead and tank-battery enclosures, according to the ordinance. Also consistent with state regulations, the permit holder is expected to grant a right of entry to the fire department at all reasonable hours to enter the premises and vehicles used in connection with well drilling for the purpose of examination.
After several months of discussion on taxing royalties paid to landowners, Village Council members Mark Bram and Frances Kluter voted against the tax. Councilman Herbert Braverman cast the lone vote in support of it. Councilman Carmen Centanni abstained, because he receives royalties from revenues earned through a well in his neighborhood. Councilman Mark Parks also abstained. Council President Daniel Brown was absent.
Council had considered taxing residents 2 percent on gross income royalties exceeding $3,000 annually from the wells. It would have included income royalties paid to Orange residents on wells located inside and outside of the village.
Mrs. Kluter has said she didn't think it would be worth the time and effort.
Mr. Brown said it could be too much of a burden for residents for the amount of money the wells generate.
The Regional Income Tax Agency, which serves Orange, already recognizes royalty income tax from gas wells. Mr. Parks said he abstained from voting, because he thought it was unnecessary, since RITA already considers it taxable income.
Mayor Kathy U. Mulcahy said the village has had to pay for additional training for fire department personnel, and money raised by taxing the income generated by the wells would offset some of that cost.
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